council tax consultation

[buggyRunner]

we've just had a questionnaire through about council tax.

basically saying do you want to cut council tax benefits and keep tax your paying the same or do you want a 1.7% increase and keep everything the same for people on discounts.

I don't want an increase, it would mean we have to pay more than the 2.5k were already paying which will mean sacrifices.

aibu?

I appreciate that part of this is about people who can't afford to contribute, but its not fair that someone else who may be struggling to pay their fair share already could be forced to pay more to subsidise someone else's share.

How can anyone possibly think that's ok?

I agree that everyone shudo pay something, even if it's only a token amount. Lots of token amounts would add up, maybe even add up to enough to prevent people who are already paying a significant amount a month from having to pay even more.

The alternative is that council run services are drastically cut. We have nowhere for elderly or disabled people to go during the day, we have dirty streets and town centres because they are never cleaned, we have infrequent refuse collections, underfunded fire and police services, ill maintained roads and hedges and parks.

None of us want that, which means everyone shoukd have to pay something, and those who are already paying for those things shouldn't be expected to pay more to subsidise others.

orwellian - taxing landlords (who've already paid income and NI on their investment and will pay capital gains when they sell) would just put up rental prices or reduce supply because people would sell. in this area house prices have gone up very little over the last 5 years

the problem is the massive increases during the last government. this means that a rise of 1.5% is quite a signif amount of money now.

Landlords already pay tax on their income, and they will have paid stamp duty when they bought their properties. Not everyone who has a property, or even who is a landlord will have benefitted from house price rises.

I find it wierd that people go on about house price rises on MN. They don't mean anything until you are elderly and might want to downsize. My first property has risen in value, but it means nothing. All the other houses have risen in value too, so it's not like I can get anything extra because of that house price rise. It makes no difference whatsoever if my house was once worth £200k and is now worth £250k on paper, I can't buy a bigger house than I already have because the every other house this size is also worth £250k.

dreaming of sun - if landlords sell that would be great news. More properties on the market for all those wanting a home rather than an investment and if lots of properties were to come on to the market it would reduce prices.

Most landlords are older have benefited from low house prices, free university education, good pensions etc. They are the ones reaping the benefits of the financial crisis at the expense of the younger generations who are basically paying for their pensions and paying for their rental properties. This section of society (the landlord class) pays very little as most of them have accountants who are able to reduce the tax they pay. A land value tax would put an end to a lot of the "get out paying tax" clauses for the already wealthy.

Outraged - of course people are going to talk about house price rises on MN. So many young families have been forced to rent (from unscrupulous landlords) or are being forced to pay huge amounts for shoeboxes so that one lucky generation can maintain the "wealth" in their house. There is absolutely no reason why a poxy, standard terrace in London suburbs with no parking should be worth half a million pounds but thanks to Blair and Brown this is what we have now - an economy built on high house prices rather than actual productivity. How destructive this has been on so many levels and in the next few decades this will play out when the younger generations cannot afford to have families or pensions and when all their income is paying just for a roof over their heads. Labour left a disgraceful legacy!

There isn't really wealth in housing though, not to people that have seemingly profited from house price rises, it's all on paper and irrelevant to people's real day to day lives.

I understand what you are saying, and I pretty much agree, but it's not the fault of people that bought houses when they did that prices have risen and they shouldn't be penalised for it, nor should they be considered greedy.

They didn't know it was going to happen, they didn't ask for it to happen. They just bought houses when it was the right time in their lives, and it's only looking bak that it could be seen to be being the right time economically. But like I say, it doesn't really matter to them. It's not like they have profited in actual real terms. They might have done on paper, but where's the benefit of that when everywhere else is equally as expensive now.

People's wages are better now than they ever were, but it means nothing because the cost of living has gone up so much. It's the same thing.

You are very misguided if you think most landlors have accountants that can fiddle their tax. They don't. You are referring to the super wealthy, not just the regular accidental landlord, or even the regular BTL landlord that is just trying to better their income and provide an asset for their family.

Land value tax would be extremely unfair, would not target those people you want to hit, and it would create less affordable housing while people sold up and stopped providing a rental property for someone who can't afford to buy.

i agree that everyone should make a contribution even those on benefits. i know the poll tax wasn't popular but it was fairer in some ways making everyone pay.

I think that with houses it is all on paper. even if you pay off your mortgage you still have no capital or a cash sum, you just don't have to pay out each month.

i am glad they are not attempting to revalue property as that always seems to be a threat and make us pay even more money that we don't have because on paper our house appears of great value.

Surely a local income tax would be most fair as then you are taxed based on what you earn rather than the value of your property - which may bear no relation to your income.

Jolly
taxed on where you live or where you work?
Spent where you live or where you work?
What if DCs go to school in another county?

Land taxes are popular because houses do not move

What if your DCs go to school in another county currently? There are reciprocal arrangements between local authorities for school funding, at least in Scotland.

Local income tax should be based on where you live. Money to go to Local Authority. Where you work will pay business rates at that property already based on the size of business.

But business rates go straight to Whitehall and are redistributed at their discretion.
They have not been local for many many years
nor is council tax : the current consultation is causing upheavals
www.communities.gov.uk/publications/localgovernment/2146644

Presumably some portion of govt income that comes from/goes to LAs has to be redistributed, otherwise you end up with areas of poverty getting very little funding as they take in little council tax and would take in little business rates if they got them directly. And some of those areas need the most LA services.
Sorry, I don't know enough about where council tax relief comes from yet, but will read that link. It'd be interesting also to see what the situation is in Scotland about where CT relief comes from and whether there are plans to change this. Seeing as Scotland has frozen CT.

but a local income tax would leave Kensington with free champagne and Toxteth with no schools

Surely not if central govt funding to LAs was worked out on a basis of redistribution? E.g those with low local income tax incomes would get high levels of govt funding.

There also seems to be a business rates retention scheme in those consultation documents although it is heavily caveated so no LA gets (Westminster's idea) of too much or too little.

I'm suggesting it would be fairer for those paying the tax.

But the point of justifying a local tax is that it stays local - otherwise its national - cannot have both ways

the current consultation is working towards keeping the money where it is raised

Local authorities get funding from council tax and central government at the moment.

Currently, folk pay council tax to the local authority. Businesses pay business rates to central govt. Other taxes like VAT go to central govt.

From these taxes, central govt funds health boards, benefits etc and also funds local authorities through a formula based on LA need.

Local income tax wouldn't be any less 'local' than council tax as LAs could vary it on the basis of incomes in their area and the level that the LA requires to balance the budget after the central govt funding has come through.

It would also be fairer for those paying it - those on low incomes would still pay little or none, those on high incomes would pay lots, whether they live in a £40k flat or a £3million mansion.

I'm arguing for a fairer tax for the people paying it.

I'm a public sector Auditor.
funds local authorities through a formula based on LA need
you are clearly too young to remember militant
"need" has never truly been the issue
political expediency is all
AND
only 80% of what goes in comes back ....

you are sadly very naive about how the tax system operates

The idea of a local income tax is interesting, but I think I would prefer to stick to the way it's done now. Council tax is at least fair. Too much, but fair.

We already have tax on income, so it's right that we have a tax based on where we live. Let's face it, the vast majority of people who have a high income will also live in the biggest properties.

Would you have local tax based on household income or personal income?

Scot Govt Local Govt Finance page

which says
5. Total revenue funding is distributed between Scotland's local authorities using a "needs-based" grant distribution system. In addition, to ensure a stable and fair distribution of grant, the grant distribution system includes a minimum grant "floor" within the settlement calculation, to ensure that all councils receive at least a minimum guaranteed increase in revenue funding for each year when there is an overall increase in revenue funding or a maximum guaranteed decrease in those years where overall revenue funding decreases.

Also
Total revenue grants fund around 85% of Scottish local authority net revenue expenditure with the remaining 15% funded largely from the council tax.

23. The total revenue funding is distributed between Scotland's 32 local authorities using a "needs-based" grant distribution system developed over many years through consultation between central and local government. The system recognises key factors which impact on councils' relative revenue expenditure needs. Grant distribution is calculated on the basis of councils' Total Estimated Expenditure (TEE) funded from both grant and local taxation. Councils' expenditure needs are split between expenditure on services and debt servicing (loan & leasing charges).

I don't know what the percentage is in Scotland of what goes in and comes back though.

Maybe my confusion about the system is because of the differences between the english and scottish systems?

An interesting question, outraged and one I'll think about. (I don't know )

jolly - local income tax does not taken any account of someone's ability to pay. It assumes everyone's essential costs are the same which they clearly are not. A young family is likely to have a massive mortgage, and childcare costs to enable 2 people to work. they would also have to run 2 cars in this area.

older people will earn a lot less but have minimal outgoings - no children at home, low/no mortgage and probably only have to have one car.

we earn a lot more than our neighbours, but they are financially a lot better off than we will ever be, and until recently we were tight on money each month.

why should the financially poor subsidise the well off via local income tax?

dreaming
I'm confused. NO income tax takes account of expenses. Why are you picking up on local ones.

One problem with the current system is that it is possible to be asset rich and cash poor. Unfortunately, when it comes to paying council tax, the council want paying in cash. I'd be happier to see council tax subsumed within income tax but the truth of the matter is that governments, both local and national, need to cut back on spending wherever possible. No more non-jobs.

talkin - agreed talkin. But at least with the current one everyone knew where they stood. where are young high earning/high expense families suppossed to find all the extra money from to subsidise low income/possibly asset rich older people?

mrjudgey - but at least that way you can sell/release some of your assets. My retired neighbours all have several properties. why should a struggling younger family subsidise their local tax - the younger family probably don't have massive savings to draw on either.